The Strategist

BofA lowers global economy forecast for 2020 due to coronavirus outbreak

02/28/2020 - 09:30

Bank of America believes that, due to the spread of the new coronavirus COVID-19, 2020 may become the worst year for the world economy since the financial crisis in 2009. Amid the virus outbreak, Bank of America reduced its forecast for global GDP growth for this year to 2.8%. Among the “side effects” of the new disease, experts also called disruptions in the supply of goods and problems in the tourism market.

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As Bank of America economist Aditya Bhave explains, global GDP growth was weak even before the advent of the coronavirus. Due to the disease, the forecast for China's economic growth, where the outbreak of COVID-19 was detected, was lowered from 5.6% to 5.2% of GDP, writes Business Insider, citing data from Bank of America.

“Long-term disruptions in the work of (factories) in China will damage global supply chains (of goods). Weak tourist flows will be another obstacle for Asia. Limited outbreaks (of a virus), like the one that happened in Italy, are possible in many countries, which will lead to an increase in quarantine and loss of confidence,” the expert says.

Among other factors that could adversely affect the growth of the global economy, the expert named the trade war between the United States and China, as well as the uncertainty surrounding the upcoming presidential election.

The International Monetary Fund previously said that the consequences of the fight against coronavirus would lead not only to a decrease in the growth rate of Chinese GDP to 5.6%, but also to a slowdown in the global economy. So far, the main factors behind the decline in business activity outside of China are delays in deliveries, as well as restrictions on movement.